Career change pays off for Houston multi-unit operator

Multi-unit operators have been a part of the growth and expansion strategy at Fantastic Sams since the brand first began franchising in 1976, according to Jeff Sturgis, vice president of franchise sales development.

"It's just a business model that makes sense," says Sturgis. "It benefits us because rather than dealing with a dozen different franchisees, we can simply communicate with one and know that he's going to take care of things at all 12 salons." He says it leverages the franchise's ability to service all the franchisees within the system, requires less time training and supporting, and reduces headaches.

But, he cautions, there is a risk that a multi-unit operator can grow to a significant size and begin to wield a lot of power. "If they have too much influence and, for some reason, turn against the system, it can make life difficult."

He also warns that it's important to keep an eye on the development schedules of growing operators. "Sometimes after the first store opens, it's more difficult than they think to open the second or the third. It can really slow things down."

About half of Fantastic Sams franchisees operate two or more salons, with the largest multi-unit franchisees operating as many as 15. There are about 1,400 salons nationwide.

Like many other franchise operations, Fantastic Sams likes to promote from within. For existing operators with the money and ability it can be a natural progression. "We like to stay engaged with our existing franchisees and encourage the right ones to consider growth," says Sturgis.

But the company also will look outside for potential multi-unit operators. "We recruit through Internet advertising, brokers, and even multi-unit operators from other brands and concepts," he says, adding that franchisees with the right background and skills can be quite successful at Fantastic Sams.

"We have found that our multi-unit operators are generally easier to support, they tend to be better managers, they're better with people, and great at leveraging resources," says Sturgis. And, he adds, they make great mentors for new or struggling single-unit operators.

He says the multi-unit development strategy will continue to be an effective growth tool for the company: "In places like Dallas, Houston, and Atlanta, where we want more market, we'd like to have a handful of multi-unit operators to build those markets." He says the company is also looking for growth in the New York state and Long Island areas.

Houston, we don't have a problem

As a certified public accountant, Tim Reed had spent most of his career in accounting and financial services jobs - that is, until about three years ago.

"I had a job change situation that made me really sit back and think about the big corporate world and whether or not I wanted to continue down that trail," says the 48-year-old native Texan. One of his first questions was should he look for an independent small business or consider franchising?

"I'd never really thought that much about franchising, but while I was examining my options, a broker approached me," he says. "Of course, one of the first franchise concepts he mentioned was food service. I'd been around that before when I was working for Sysco and I knew I wanted no part of that," he says with a laugh.

After identifying what would match his interests, goals, and objectives, he narrowed the field down to three potential franchise candidates. One of those, which ultimately got the nod, was Fantastic Sams.

"I knew right from the beginning that if I were going to make any money in this at all that I needed more than one salon," he says. So he signed on initially for three, opening the first in March 2005. Within a matter of months, he had purchased two more Fantastic Sams salons from another operator, before bumping into Chris Woelfel.

Woelfel was also operating a couple of Fantastic Sams salons in the Houston area. The two hit it off and teamed up, forming TRCW Enterprises. Today they co-own and operate 11 Fantastic Sams salons throughout Greater Houston.

"It's been exciting," says Reed. "We've experienced quick growth in the last three years. We've added six salons just in the last four months alone."

System-wide employment tops out at around 75 employees. Reed says one of the greatest challenges for him is finding good, qualified stylists - properly licensed and who present the right image - and then keeping them behind the chair.

"This industry is known for high turnover, so we've tried to create an environment where we offer competitive compensation, no-cost training, and flexible scheduling for our stylists," he says.

Part of that positive environment includes empowering each of his 11 store managers, giving them responsibility and holding them accountable. His managers are responsible for keeping each store in top operating shape. "They handle scheduling, ordering and managing supplies, day-to-day stuff, and even minor employee-related issues."

That philosophy echoes Reed's self-proclaimed "definite delegation" style of management. "We want the managers to know what to do, how to do it, and have the power to do it," he says.

Reed says he and Woelfel will step in if major issues need to be dealt with. "Obviously, as multi-unit operators, we can't be everywhere all the time," he says.

Logistically, Reed and Woelfel have split their territory in half, with Reed handling six of the salons and Woelfel acting as point man for the other five. All of the stores are within a 60-mile radius.

Multi-unit model love

In addition to increasing his earnings potential, multi-unit franchising holds several other benefits, says Reed. "With all of our salons being so close, we can shift employees if someone's sick and fill gaps when we need to from one store to another." He also likes the fact that he can maximize his marketing dollars.

Another advantage, he says, is that "more people equals more ideas." For example, he can selectively use his stores to try out new ideas, products, policies, and procedures. "It's been a great way to find things that work, and things that don't."

Things seem to be working just fine: Reed says each of his 11 stores is averaging around $5,500 in business every week.

Reed says he's committed to opening another three stores in the next couple of years and doesn't rule out further expansion - but not by adding other brands. "We want to stay focused on Fantastic Sams," he says. "We're just now at a point where we may have to consider adding another level of management to our company to help manage and maintain things daily."

What motivates Reed to go to work each day? Looking for ways to improve the company, identify the weaknesses in under-performing stores, and get them up to par with his top performers.

"The full-service salon can be tricky. What works in one market may not work in another - clientele and styles can vary from location to location," he says. "We try to distinguish ourselves through customer service and the right product mix."

Profile:

Memorable first job: My first job was helping train horses when I was about 12 or 13. I got thrown off a lot and for that I made about $2 a day, but I had a lot of fun.

Professional tip: No matter how menial a task may seem, always do the best you can. If you can't be trusted with simple jobs, you'll never be trusted with more complicated ones.

Key education: My brief time in politics as a city commissioner in Atlantic Beach, Florida, taught me the importance of dealing with issues without making it personal. You may be on opposite sides of the debate on one issue but together on another, so it is important to always treat people with respect and maintain a good working relationship with them even if you disagree.

Role model(s): Bud Turnage, who is the children's pastor at Second Baptist Church in Houston. I find his passion and commitment inspiring.

Currently reading: The Case for Christ, by Lee Strobel

Others say you are: Focused, determined

Business news sources: Wall Street Journal, Houston Business Journal

Favorite web sites (besides your own): foxnews.com

Franchise systems (besides your own) that are creative: Chik-fil-A. I like the way they have woven the values of their founder into the operations of the business and the consistency of the product and service. I've never had a bad experience in one of their restaurants.

Favorite quote: "It's not whether you get knocked down, it's whether you get up." (Vince Lombardi); "If you never do more than you're paid for, you'll never get paid for more than you do." (Unknown)

Best advice anyone ever gave you: Try to find a win-win solution in every negotiation.

Best advice you ever gave anyone: If you enjoy doing something, stick with it no matter what others tell you.

Biggest project for the year: Getting all our salons on the same system and implementing standardized procedures.

What you do to unwind: Help with my kids' activities - baseball, swim team, scouts; Sudoku puzzles